METSÄ BOARD Annual review 2023
Material sustainability-related impacts, risks and opportunities
its responsibilities are described in more detail in the Corporate Governance Statement . Metsä Board updated its materiality assessment of sustainability matters in 2022−2023 in cooperation with Metsä Group. The updating of the materiality assessment proceeded in two phases. In the first phase, in 2022, the views of external and internal stakeholders of the company’s real and potential impacts, risks, and opportunities were collected through interviews and surveys. The stakeholders interviewed included the company’s own employees, as well as its customers, investors, goods and service suppliers, and NGOs. Based on the material collected, the impacts, risks and opportunities were prioritised in management workshops. The prioritisation was based on double materiality, meaning that the workshop participants paid attention to the company’s impacts on the environment, society, employees and other stakeholders, as well as on the qualitative and financial risks to and opportunities for the company’s business related to sustainability matters. The likelihood and scope of the impact, risk or opportunity were considered in prioritisation.
At the end of the first phase, seven themes guiding all Metsä Group’s sustainability work were determined. They are described in the summary of the materiality assessment, on page 26 . The themes were used as the basis for updating Metsä Group’s strategic 2030 sustainability targets, which also guided Metsä Board’s target setting. Metsä Board’s Board of Directors adopted the themes and the updated targets in early 2023. The framework of the EU’s sustainability reporting standards was not yet used in the first phase to classify sustainability themes. The second phase of the materiality assessment was initiated in 2023, the goal being to include the classification of sustainability impacts, risks and opportunities in line with the EU’s sustainability reporting standards (topics, sub-topics and sub-sub-topics) and consider the directive’s guidelines on the prioritisation of impacts, risks and opportunities in the materiality assessment. As part of the work carried out in 2023, an assessment scale, found on page 27 , was drawn up. The scale standardised
for Metsä Group’s risk management process was used to assess likelihood. Impacts are assessed based on their scale, scope, duration and remedia- bility. Risks and opportunities to Metsä Board’s business were assessed based on the monetary values and reputational risks defined in the risk management process, and in the case of risks, on remediability. The assessment of impacts, risks and opportunities was expanded from the previous year to cover the sub-topics and sub-sub-topics specified in the EU’s sustainability reporting standards. As a result, the impacts on workers in the value chain, affected communities, consumers and end-users could be better accounted for. Remediability was assessed on the following scale: short-term (less than one year), medium-term (1−5 years), long-term (5−10 years), very long-term (10−30 years) and irremediable. The work carried out in 2023 did not lead to any changes to the seven sustainability themes guiding sustainability work or the 2030 sustainability targets.
Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6
■ The identification and assessment of material impacts, risks and opportunities Metsä Board’s sustainability-related material impacts, risks and oppor- tunities have been identified in a double materiality assessment based on the principles of the company’s risk management process. The risk man- agement process complies with the COSO Enterprise Risk Management methodology. The key goal is to identify and assess the risks, threats and opportunities potentially significant to the implementation of the compa- ny’s values and strategy and to the achievement of long-term targets, as well as to identify and assess the company’s impacts on society and the environment. In addition to the company’s own operations, the identifi- cation and assessment of impacts, risks and opportunities encompasses the upstream and downstream value chain and any other parties that the company’s operations affect. Metsä Board’s risk management process and
Strategy and financial targets
8
Value creation
Financial development 10 Key figures 12
Report of the Board of Directors
20 72
• Sustainability statement • Sustainability statement assurance report
Assessment scale for impacts, risks and opportunities
74
Consolidated financial statements
78 Notes to the consolidated financial statements 126 Parent company financial statements 129 Notes to the parent company financial statements 142 The Board’s proposal to the Annual General Meeting for the distribution of funds 143 Auditor’s Report 147 Shares and shareholders 151 Ten years in figures 152 Taxes 153 Production capacities 155 Calculation of key ratios and comparable performance measures Corporate governance 157 Corporate governance statement 165 • Board of Directors of Metsä Board 168 • Corporate Management Team of Metsä Board
Material sustainability topics
Annual
Very likely
5
5
10
15
20
25
Theme
Topic
Sub-topic
Materiality 2030 target
E – ENVIRONMENT
Climate change mitigation Climate change adaptation
10 10
√ √ √
In the next three years
E1 Climate change
Likely
4
4
8
12
16
20
Energy
9
Pollution of air, water and soil
7
E2 Pollution
1. Safeguarding biodiversity and the ecological sustainability of forest use
Microplastics
6
In the next six years
Possible
3
3
6
9
12
15
√
Water
E3 Water and marine resources
6
2. Mitigating climate change and reducing emissions
√
Direct impact drivers of biodiversity loss
10
E4 Biodiversity and ecosystems
√
Impacts on the state of species and the extent and condition of ecosystems
11
3. Resource efficiency and sustainable production
In the next ten years
√
Impacts and dependencies on ecosystem services
12
Unlikely
2
2
4
6
8
10
√
9
Resources inflows, including resource use
E5 Resource use and circular economy
Resource outflows related to products and services
10
Waste and side streams
6
√
S – SOCIAL RESPONSIBILITY
Unlikely in the next ten years
Very unlikely 1
1
2
3
4
5
Equal treatment and opportunities for all
9
√ √ √
S1 Own workforce
Health and safety
11
Other working conditions
7
1
2
3
4
5
Other work-related rights
5
4. Respecting everyone and doing the right thing
√
Health and safety
12
S2 Workers in the value chain
Financial impact
Very limited
Limited
Moderate
Significant
Very significant
√
Other working conditions
8
5. Promoting safety and wellbeing at work
√
Other work-related rights
7
Long-term national concern, significant change in market share, significant operations restricted
Local harm to reputa- tion, impact on local operations
Short-term national con- cern, long-term impact on reputation
Long-term national concern, decisive change in market share
6
Communities’ economic, social and cultural rights
S3 Affected communities
Local mention, quickly forgotten
Reputation
Rights of indigenous peoples
9
170 Remuneration report 174 Investor relations and investor information
Personal safety of consumers and end-users
8 6
S4 Consumers and end-users
Information-related impacts on consumers and end-users
G – GOVERNANCE
Very limited impact on individuals and/or the local environment
Limited impact on a group of people and/or the regional environment
Moderate short-term impact on society and/or the environment
Significant short-term impact on society and/or the environment
Severe long-term impact on society and/or the environment
Impact on the wellbeing of society, nature and other stakeholders
Corporate culture
8 8 8 6 6
√
G1 Business conduct
6. Innovation and open-minded cooperation
Corruption and bribery
√
Management of relationships with suppliers including payment practices
Impact
7. The significance of forest-based bioeconomy to society
Protection of whistle-blowers
Political influence and lobbying activities
26
27
Report of the Board of Directors | METSÄ BOARD ANNUAL REVIEW 2023
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